Archives for April 2015

Cats in Lions clothing

alley_cat_calgary_real_estate_mentoring_educationThere are lots of houses that look amazing in the pictures online either on MLS or for sale by owner websites.  Professional photographers and even hobbyists are able to do magical things through post production these days.  When looking at houses to renovate, rent, rent to own or any other strategy in real estate – looks can certainly be deceiving.  The ability to confirm comparables is also severely affected by these factors – because your realtor is just looking at the same square footage and beds and baths to give you a comparative market analysis. They might be basing those numbers of fancy pictures that do not really tell the whole story of value for the home you are thinking of buying.  One of the ways around this is to ensure that the realtor has been inside at least a couple of the homes in the area – or you may want to consult another realtor who is an area expert because they would have actually seen some of the comps in your target area first hand. Experienced real estate investors will make a point to go and see some of the homes for sale in the area to get a feel for things such as the quality of finishings, solid as opposed to hollow doors, color of appliances used, gas/electric range, flooring that is common, and the types of fixtures used in the bathrooms and kitchens to confirm the after repair values.  These items can all look very different in the pictures – also the layout of the rooms and their sizes can not be truly experienced unless in the home, some houses are just plain awkward in how they are laid out and this is rarely something you can determine from the photos. How a house feels within the first 10 feet of walking inside will be what turns your buyer/renter on or off so that awkwardness drops the value of a house considerably which could be an opportunity for you if you can think of a way to change the layout to something more attractive.  Having an experienced real estate team that knows what is going on in a certain area can help greatly reduce the time you spend looking at properties to buy – ultimately putting more money in your pocket! Think about taking a closer look at that property that you think needs about 20,000 in improvements it could very well be a mangy alley cat in lions clothes!
To your success!

Tim R

 

Small Deals Big Profits

make_money_in_real_estate_Calgary_mentoring_small_dealsThere are a lot of investors out there that get taught by this course or that course that you need to make 5000 for a wholesale deal and 50,000 for assignments of deals with larger profits.  This is not necessarily the profits that you will see in a lot of the deals that are out there, having an extra 5000 cut out of the deal could make or break the deal for the investor you are trying to sell it to.  If the investor only has 3000 up front to pay you – then I say you should take it! The common mistake that I see investors making out there is trying to ask for fees that are too high to make the deals appealing to investors that have smaller profit ranges.  There is a river of money to be made closing LOTS of deals were you can make 30-10,000 per deal rather than waiting to wholesale the 2 or 3 deals out of 10000 that will get you 20K in assignment fees.  This same phenomenon holds true when looking at renovation projects in Calgary and area, the real estate market in Calgary is still very expensive and unless you want to spend 80-180K on your renovation project (which you could do in just about any area in Calgary) then you will have to consider smaller/faster projects where the profits might be a bit skinny but they will start and close a lot faster.  The way to get ahead in your real estate business in the beginning is to set your sights on the low hanging fruit – which are the quick and easy projects we like to call “lipstick and rouge” renovations that only require the basics such as paint, flooring, appliances, and some clean up in the bathrooms and kitchens.  This type of renovation deal can be done in Calgary and area for cheap and then you can get the property back on the market for a quick sale.  There are also a much larger and less picky buyers pool for these properties because of the lower price point, the other options will all be very dated in need of some serious TLC so if your newly cleaned up property is next door then you will get a great price in less time in these areas than you would in the higher end areas of town where the buyers have the budget and time to take as long as they want.  Think about the math here…it is always far better to make say 20k on the property that you actually DO as opposed to 100% of the 80K flip that never happens! If you are able to make even 10k per property with a joint venture partner and you do 5 of those each year then you put an additional 50,000 on your bottom line.  Keep your eyes on the bigger prize of profits and consider doing a bunch of smaller deals rather than waiting for the big fish that could be an expert and avoiding your real estate fishing line!

 

To your success!

Tim R

Renovations to Riches

Renovations_Calgary_real_estate_investing_mentoring_educationThe real estate market in Calgary definitely has been affected since the oil prices plunged a couple months back, but what that means is the lofty prices that sellers were getting are starting to come back down to earth.  That means that renovation projects and even buy/fix/hold projects are starting to pop up all over town.  We are currently vetting out a number of projects to renovate and sell, there is a lot more to choose from in the 250-400,00o range than there was even just a month ago.  When the market starts to panic and the sellers get nervous prices start to make a lot more sense, however that does not mean the game gets much easier – there are still many competing offer situations happening right now in Calgary showing that there are investors both new and seasoned, coming out of the wood work to snap up some deals now that spring is here.  Renovations are one of our favorite real estate strategies because it works in any market: up, down, sideways you can find the right property at the right price and add value creating a profit in all market conditions.  There are some things you have to watch out for to be sure -such as keeping your costs in line, getting the project done on time, and having your holding costs being a low as possible.  Once you have a great renovation crew and a system in place to make sure you have the property financed a the lowest costs possible then renovations become a trick you can pull out of your real estate toolbox any time of the year to drive some profits to the bottom line.  These profits are also short term and normally high rates, which can help to build your capital to fuel your buy and hold passive income strategies or rent to own practice.  The deals are not just in Calgary however, surrounding areas such as strathmore, airdrie, okotoks, and chestermere are also places we are seeing deals pop up this spring.  Due to the downturn in the market (also at all other times of the year) there are owners going into foreclosure creating deals for investors to get into properties cheaper which increases your renovation profits.  Common opinion is that you only get a fast re-sale in the big cities, but if you price the property right in the smaller regions with an excellent agent you can get the fast timelines you are looking for just like in the big city.  Smaller centers do have one main challenge, which is confirming the after repair value based on a small (or very small) number of comparables.  This can make the numbers trickier to nail down, but you could consider looking to adjacent towns with similar populations and demographics to give your numbers some more confidence.  Renovations are a strategy that you can make huge profits in short time periods if you have a great system in place, take a closer look behind the renovation curtain and you just might find your pot of gold waiting for you!

 

To your Success!

Tim R

Do Business not Hobbies

Real_estate_business_Not_hobby_mentoring_Calgary_investingHow much time of you free time is spent doing productive things? After adding up all the hours we are awake over the course of the week then subtracting the work hours/travel time/kids/sports for the kids we are left a finite amount with which we can better ourselves.  How much of that time is spent watching TV? Shopping? (cue dramatic sound) Messing around of social media sites (not for business)? Try keeping a time log for a month and the results could be shocking indeed! When someone decides to get into real estate investing in Calgary or anywhere else in Canada, they have often taken a seminar that told them they could make a large amount of money in a short period in their free time after work.  This could be true in some rare cases but at it’s core real estate investing is a patience game – not a get rich quick scheme.  Real estate Investing also requires a large, focused, and sometimes tenacious effort to get things done and deals closed.  This also requires a very large investment of time to make the business successful and find the right deals, negotiate them, and execute them for those that have a couple hours each day to devote to real estate will likely be very disappointed with how far they are getting and how fast.  When you decide to have a hobby such as scrap-booking, photography, puzzles, or poker you could do those things for as little as 1 hour per night and if you missed a few nights due to work or what I like to call “life happens” then no big deal – you can always pick up where you left off some other day no harm done.  Also, you could have a bunch of hobbies that you can alternate back and forth causing to real detriment to any one thing you do in your spare time.  If you plan to get into real estate investing and also plan to make money, then you have to focus on a few things at a time to find deals/profit from them and find a system to make those activities repeatable.  Investing in real estate is at its core a patience game that takes long hours, fierce commitment, and often competition just like a race to the finish line having to beat out other investors to get the best properties.  Don’t get me wrong, you can have a successful career or other job and still be able to invest in real estate – you just need to become very strategic with the time you have available outside of that career/job.  Most people that decide to get into real estate investing took those seminars that told them they could make huge money in a short period of time only spending a few hour each week working on their business.  This may be true in some very rare cases, but those are the exception and not the rule!  Real estate takes a lot of effort, the mistakes are very costly, and a lot of precious time: s0 a hobby-like commitment will not get you the results you are expecting.  I would say that part time hours are the most effective way to look at scheduling your real estate investing business, especially in the start up phase for the first year when you are building your network, anything less will get you moved forward but at a lot slower pace.  Think about it, start a time log for a month, after all do you want to be a turtle in real estate investing “hobbying” along or a swift fox chasing down that next deal?

 

To your success!

Tim R

Tenant First for more closed deals

rent_to_own_Calgary_Mentoring_Real_Estate_EducationRent to own has 2 main strategies and today I would like to talk about the best fit for the Calgary market at the current time.  Both strategies still work, so those sandwich lease advocates can still work their magic but they will be having a tougher time finding motivated sellers willing to get their payments covered.  Tenant first rent to own is the strategy that investors use when they have credit to qualify as well as down payment dollars to fund bank mortgages.  This method works very well because you get to qualify a tenant buyer, let them loose with a realtor, then they PICK the house they want to use for the rent to own program.  These tenant buyers will normally need very little credit repair (hopefully none) and they make good money from being a self employed business owner, or just simply do not have the whole down payment saved.  This high quality tenant buyer will be much more likely to close because they do not have the credit issues, as well as picking the house they wanted to live in makes them much more invested in closing the deal at the end of the term.  Tenant first works well if you have large capital reserves/credit capacity, if not you will run into the “brick wall of finance” with these just like buy and hold investors because you need new mortgages for each deal you plan to do.  This is where partners come in, you will have to seek out joint venture partners to help you qualify and put in the down payments to gain new mortgages for each new deal.  There are many people out there looking for a better return on their investments and rent to owns almost always have double digit returns year over year – that you can count on unlike mutual funds!  Once the investor has seen the returns for the first deal they will be more than happy to do more with you so long as each deal is a win-win for both parties.  Tenant first rent to own deals can sometimes be closed in less time because they buyers often have more money up front for the option deposit, and are often more motivated to close on the home to be able to call it their own!  Rent to own is a great strategy to help people realize their dream of home ownership.  Rent to own has two flavors, this one works best for the “taste” the Calgary market has right now!

 

To your success!

Tim R